Crude oil prices helped prop the Loonie to the second highest spot among its peers last week. Which catalysts can move the comdoll around this time?
IVEY PMI (Feb 6, 2:35 pm GMT)
The IVEY PMI, a closely-watched measure of purchasing manager activity in Canada, boosted the Loonie across the board last month when it printed a 59.7 reading for December when analysts saw the release at 56.8.
This week, market bees are buzzing for the report to improve further to 60.2. Since Canada won’t be printing any other top-tier report, it’s likely that traders will pay attention to the release.
Employment reports (Feb 8, 2:30 pm GMT)
Like the IVEY PMI release, Canada’s labor market gave Loonie bulls reason to cheer in its previous release.
While the unemployment rate held steady (at its record low!) and labor force participation rate remained steady at 65.4% in December, it was enough for traders that the economy had also added a net 9,300 jobs when many expected a 5,500 drop after a huge 94,100 addition in November.
It wasn’t all rainbows and butterflies, however. A net of 28,300 part-time workers may have found jobs in the month, but it was partly at the expense of the 18,900 who lost their full-time work.
On Friday, traders are looking for the jobless rate to inch higher from 5.6% to 5.7%. Not only that, but a net of 6,000 jobs are also expected to have been created for the month of January.
Remember that the Bank of Canada (BOC) has recently joined the “data dependence” bandwagon, and that Canada’s labor market is one of the economy’s brighter spots.
If we see surprisingly weak numbers from this Friday’s release, then we could see the Loonie retrace some of its intraweek gains against its major counterparts.
Crude oil prices
If you’ve seen last week’s price action review for the Loonie, then you’ll know that the comdoll took cues from crude oil’s movements.
See, the Black Crack gained bullish momentum after Washington imposed sanctions on Venezuela’s state-own oil firm and limited its transactions with U.S. companies. And then there’s the strong U.S. NFP report, which points to stronger oil demand from the U.S.
Oil prices seem to be keeping their momentum so far, though oil rig and supply updates from the U.S. could cause a wiggle or two on oil price action.
Oh, and don’t forget that major market themes like Brexit updates, central bank biases, and the U.S.-China trade negotiations tend to influence the prices of higher-yielding bets like crude oil and the Loonie!
Missed last week’s price action? Read CAD’s price recap for Jan. 28 – Feb. 1!